Mapping the Gap

FOCUS ON RESEARCH: Board Leadership’s occasional look at what’s happening in the world of governance research in general and research on Policy Governance in particular.

By John Bruce

August 22, 2012

The U.K. National Health Service (NHS) is thought to be the fifth largest employer in the world. Here, long-time NHS chair John Bruce reviews a recent research report on local level governance of the NHS from a Policy Governance perspective.

Any effort to improve governance practice is to be applauded, and a well-intended recent report from the Institute of Company Secretaries and Administrators (ICSA), “Mapping the Gap,” published in 2011, highlights some interesting issues for the NHS.1 It does not claim to be a scientifically or academically rigorous piece but focuses on current practices in a number of NHS commissioner and provider organizations. It also highlights the disconnect between what is currently thought of as governance best practice and reality in the NHS in England.

The research project that resulted in the report was initiated to examine the degree to which NHS Trust boards understood issues of governance and the extent to which actual boardroom behavior reflected guidance on best practice. ICSA analyzed 1,277 board agendas, received 176 responses to an online questionnaire, observed 20 board meetings (open and closed), and interviewed participating board members. The data gathered provide a unique snapshot of current board governance practice in the NHS.

One of the main aims was to establish whether current board governance arrangements increased or decreased the likelihood that strategic objectives would be met and, depending on the findings, to make observations concerning the challenges facing the existing framework. Another aim was to inform proposed governance arrangements under the new NHS framework to be introduced under the new health and social care law, which had a very stormy passage through Parliament.

For the purposes of the research, ICSA adopted the definition of governance it considered most appropriate to the NHS: “The systems and processes by which health bodies lead, direct and control their functions in order to achieve organizational objectives and by which they relate to their partners and the wider community.”2

Governance is a much-discussed issue in the health sector. A report from the Audit Commission, “Taking It on Trust,” estimated that there were over 1,000 pages of guidance on good governance aimed at the NHS.3 In conducting the research for the online questionnaire, ICSA referenced the Healthy NHS Board guidance, the most recent document on improving governance across all NHS entities.4 Other documents were referenced as well for specific aspects of the research.

ICSA focused its research on four key areas of governance theory and reality:

Strategy

Decision making

Clinical and quality matters

Probity and transparency

Findings

ICSA’s research found that board members were aware of the importance of good governance and understood notions of best practice, but there was a gap between theory and reality in a number of key areas. The following sections identify some of these key areas. The report’s findings are italicized, with my commentary following them.

Strategy

• There was little discussion relating to a board’s vision for staff and stakeholders.

From a Policy Governance perspective, this suggests that NHS boards are a long way from having Ends as we know them. The reference to staff separately from other stakeholders is also interesting and may reflect the fact that the NHS is the fifth largest employer in the world. However, from a Policy Governance perspective, the lack of reference to legal or moral ownership means that the starting point for establishing Ends and therefore strategic direction is not clear.

• Boards believed holding the executive team to account was a higher priority than strategy setting.

Holding the executive team to account for fulfillment of strategic direction is obviously impossible if these boards are not discussing the vision that would set their strategic direction. And NHS executives are not subject to Limitations in the Policy Governance sense. Board leadership on prudence and ethics is much more a process of prescription, with little by the way of prestated criteria.

Also note that the boards are holding “the executive team” to account, which raises questions about CEO accountability. It is also worth highlighting the fact that most NHS boards are required to have an equal number of executive and independent directors. Holding the executive team to account when they represent half the membership of the board raises interesting questions about how this can be accomplished in view of the very strong potential for conflict-of-interest issues.

• On average, 10 percent of agenda items were dedicated to strategic issues in contrast to best practice recommendations of 60 percent.

It is often not clear where recommendations for best practice originate. In my experience, such recommendations are often accompanied by a big name as if to provide authority, and yet they have little substance, and maybe none at all. There is no doubt that many boards spend little time on strategy, which I suspect is a symptom of lack of role clarity, including where in the system responsibility lies for strategy. Policy Governance brings clarity: it is the board’s role to set the Ends and its delegates’ role to develop the strategy needed to fulfill any reasonable interpretation of them.

This is an often-heard criticism of NHS and other boards. From a Policy Governance perspective, of course, the board should not be merely relying on individuals to ask questions at particular meetings. Rather, it should be taking a rigorous approach to ensuring that its collective criteria for the proper operation of the organization are clear and that it is collectively and regularly interrogating organizational data that pertain to those criteria.

• Information presented to boards was of variable quality when assessed in terms of accuracy, timeliness, and relevance, with a lack of cross-referencing, internal and external validation, and data on future trends and market context.

From a Policy Governance perspective, this is not surprising given that there is no differentiation between monitoring decisions based on stated criteria and other decisions. “Wandering around in the presence of data” is prevalent. The whole issue of board reports is poorly understood.

• Boards were more frequently presented with items marked “to note” rather than “for decision.”

This goes to the lack of clarity about roles: those of board, chief governance officer (CGO), and chief executive officer (CEO). When there is doubt about who is responsible, executives tend to feel that it is safer to inform the board anyway. In my experience, since the board lacks clarity about its own role and information needs, it will then start to worry that just noting such items could be a dereliction of its duty, and a very confused discussion ensues.

Clinical and Quality Matters

As a result of a major inquiry into excessive patient deaths at a hospital in the Midlands region of the United Kingdom, the NHS, government, regulators, and other interest groups have focused on clinical outcomes for patients. A report from the national Department of Health, published in July 2012, is likely to have far-reaching consequences for boards and managers and already has resulted in a high level of attention to clinical and quality matters. The ICSA research addressed these matters as well:

• Only 5 percent of boards observed that clinical and quality issues were clearly aligned to strategic objectives.

From a Policy Governance perspective, the difficulty in recognizing monitoring of means issues as distinct from Ends accomplishment may explain why this seems to be the case.

• Clinical and quality issues took up between 4 and 13 percent of the top five agenda items, depending on the type of trust, in contrast with governance guidance recommending a minimum of 20 percent.

The basis for recommending 20 percent is not clear. Indeed the basis on which the board should determine its whole agenda seems to be an issue. Is the board one step down from the owners or one step up from management?

• The acquisition of information on clinical and quality matters from a range of sources, including site visits and patient feedback, did not appear robust.

In my experience, in the absence of monitoring against prestated criteria, what develops is a confusing array of data sets, all ostensibly addressing the same information area but not helping the board clarify what it needs to know.

Probity and Transparency

• Seventy-five percent of board agendas included declarations of interest as an item.

From a Policy Governance perspective, I wonder if this means that executives on the board must declare their permanent conflicts with items pertaining to the evaluation of executive performance.

• Interviewees did not view open board meetings alone to be satisfactory for meeting accountability and transparency obligations.

NHS board business is conducted in public (subject to a few exceptions); a practice that from a Policy Governance perspective also is considered necessary but not sufficient.

• Only 1 percent of questionnaire respondents agreed that involving the public in shaping health care services was a priority for the board.

From a Policy Governance perspective, there is a lack of clarity about owners and beneficiaries, which means that moral owners remain seriously marginalized.

Recommendations

Given my comments above, it is not surprising that recommendations made from a Policy Governance perspective would be quite different from those actually contained in the ICSA report. Nevertheless, here is what ICSA recommended:

All NHS entities should reexamine the composition of their board agendas and ensure that their content reflects the importance of clinical and quality issues. Board papers should focus on strategic decision making.

The board should regularly review the information it requires and receives, remaining alert to achieving an appropriate balance between historical oversight, horizon scanning, and strategic analysis.

NHS entities should commit time and resources to developing and training all directors and governors on their legal duties and good practice governance. Such development activities should include whole board exercises and training for individual directors and governors.

To encourage meaningful transparency to stakeholders at open board meetings, NHS entities should ensure that up-to-date and accurate information is publicly available and that the meeting environment is conducive to the purpose.

NHS entities should consider a range of ways to improve meaningful public engagement and effective accountability that maximizes its audience reach and outcomes.

NHS boards should promote transparency and accountability by declaring conflicts, real and perceived, in accordance with the organization’s agreed policies on managing conflicts of interest, accepting gifts and hospitality, and antibribery guidance. Corresponding registers should be publicly available.

NHS governing bodies should regularly review information available about the governance arrangements of the organization and how it makes decisions.

To readers who understand Policy Governance, it is obvious that the ICSA recommendations fail to go to the heart of real governance and illustrate the inadequacy of making “best practices” improvements that are not founded on sound governance theory.

Notes

1. Mapping the Gap: Highlighting the Disconnect Between Governance Best Practice and Reality in the NHS (London: Institute of Chartered Secretaries and Administrators, July 2011).